The Mountain West will be Experiencing A Second Gold Rush. This specific Time They’re Mining Bitcoin.

On a cold, damp, February evening, roughly 70 residents of Bonner, Montana, population 1,633, filed into the cafeteria of the local elementary school to talk about their completely new neighbors. Specifically, they were there to complain about “the roar.”

For 2 hours under the fluorescent lights, community members trudged up to the podium in their snow boots to voice concerns about the sound coming through the town’s old lumber mill. Some claimed the wildlife — particularly the hummingbirds as well as the deer — were nowhere to be found since the roar began around six months ago. Perhaps, one attendee suggested, “avian PTSD” was to blame for their disappearance. Residents took turns complaining of trouble sleeping, of newfound anxiety as well as depression, falling property values, as well as a growing feeling of desperation which the roar may never end. One concerned citizen wrote in to the council which she as well as her dog were itching all over as well as losing their hair; she blamed the roar. At one point, halfway through the meeting, when frustration seemed at risk of simmering over, council member Burt Caldwell issued a friendly warning: “Remember,” he told the group, “we’re not here to beat up on the bitcoin guys.”

The locals didn’t look mollified. Over decades, they’ve grown used to the sounds coming through the building when the idea was a lumber mill. nevertheless the completely new occupants were industrialists of a different sort, as well as the roar was the sound of rows of servers as well as fans feverishly whirring in an effort to solve complex cryptographic puzzles which could unearth digital money.

In recent months, with bitcoin’s value as well as cultural prominence rising spectacularly, dozens of cryptocurrency mines have popped up from the rural West, following from the geographic footsteps of a previous gold rush. Lured by cheap rent as well as wide-open space, they’re bent on bringing “mining” back to a region which was largely defined by pulling precious materials through the earth — only This specific time, the gold will be digital.

In January, an unknown company working from the blockchain space purchased 7,000 acres at the Tahoe-Reno Industrial Center in Nevada, right next to Tesla’s Gigafactory. At the end of February, a Utah-based company called Power Block Coin LLC announced a plan to invest $251 million over the next three years in Butte, Montana, to build a campus of mining data centers.

as well as here in Bonner, a town of less than 2 square miles nestled along the winding banks of Western Montana’s Blackfoot River, one of North America’s largest bitcoin mines has set up shop. The locals have questions — about how the idea all works, about how cryptocurrency mining might revitalize the area’s sluggish economy, as well as most important, about whether the idea can be trusted to stay from the region for the long-term. Could a cryptocurrency boom could be the region’s best chance to revitalize old industry towns? Or the idea will these companies elbow their way in, only to disappear if as well as when the bubble bursts?

Charlie Warzel / BuzzFeed News

“You need just four things to produce bitcoin profitably,” said one cryptocurrency miner operating from the Pacific Northwest, who could only speak anonymously, “stable government, cheap power, Great internet, as well as space.”

The Mountain West neatly meets all four criteria; indeed, “I’ve always thought we were a prime place for a data center if the stars aligned,” said Jim Davison, executive director of the Anaconda Local Development Corporation. “as well as the idea appears which maybe they have.” Davison’s organization works with companies looking to do business in as well as near Anaconda, a town of just over 9,000 about 100 miles southeast of Bonner, as well as he has watched closely as cryptocurrency companies have courted the region.

In December, a company called Cryptowatt reportedly purchased an empty primary school in Anaconda for $205,000 to house a training facility for data center employees. In late January, the company bought up a 53-acre plot of warehouses owned by a technology company. Dan Burrell, the company’s chief executive, told the Montana Standard which Cryptowatt plans to employ 50 people as well as will be hoping to invest between $75 million as well as $100 million into both Anaconda as well as neighboring Butte.

“You need just four things to produce bitcoin profitably: stable government, cheap power, Great internet, as well as space.”

Those plans will likely appeal to local governments, nevertheless residents of Anaconda as well as Butte — once home to one of the biggest copper mines from the nation — are wary. On a private Facebook group for the town, locals expressed their excitement at the prospect of a completely new industry in Anaconda, nevertheless worried about hitching the region’s economic development to a technology as completely new as well as complex as cryptocurrency.

“How many of those jobs will be filled with current unemployed in Anaconda?” one poster asked the group earlier This specific year. “The jobs are contracted, which means no benefits. When This specific was proposed, bitcoins were $18,000 currently the idea’s $8,000.”

Others, however, were less concerned: “Great for our town! Have you looked for work in anaconda lately! Lol nothing!”

Ken Schmidt, who’s been living in Anaconda for 45 years, describes his take on the local cryptocurrency boom as “optimistic skepticism.” According to Schmidt, the region has seen numerous businesses — through helmet-lining manufacturers to golf course architects — promise as well as then fail to revitalize the community from the decades since its first major job creator, a smelting plant, closed in 1981.

“We are the poster child of optimists with dashed hopes, without a celebrity to tout our cause, much like any little town,” he said. “the idea’s no wonder we jump at any possibilities of recovery, however slim the chances.”

Schmidt argued which, even if the cryptocurrency company rounds down its job estimates through 300 to something more modest, the idea’s still better than nothing. “We develop the power at the substation, why not siphon off a few megawatts to entice a company to set up shop? Maybe our kids will stay in town to keep us old folks company.”

nevertheless, he said, there’s reason to be gun-shy.

“the idea’s based on a currency which isn’t tangible, won’t ever replace old-fashioned money, as well as fluctuates more than Warm Springs Creek from the spring.”

generating matters more difficult, the Anaconda mining project has attracted at least one name which has a checkered past. Though not an employee, investor, or paid spokesperson for Cryptowatt, one of the company’s biggest evangelists from the region will be Rick Tabish, a local businessman who was convicted then acquitted of murder from the death of a Las Vegas casino executive. “His backers don’t know jack about our town, as well as just want a free ride on the backs of local taxpayers,” said Schmidt. “Why give them the short-term profit at our expense?”

Charlie Warzel / BuzzFeed News

Project Spokane’s mining operation, nestled from the mountains of western Montana.

Driving through Bonner, there will be simply no way to miss the mine. The old lumber facility, which sits about a mile off the interstate, isn’t just massive by little-town standards — the idea’s one of the biggest buildings from the state. as well as the idea’s brought its occupants, a cryptocurrency company called Project Spokane, some scrutiny, including numerous skeptical articles as well as investigations from the local press. Despite attempts to keep the idea secret for security reasons, the mine’s location was blown last summer, when the first articles about its loud fans were reported from the Missoulian. as well as in January, Missoula’s alt-weekly published a deep investigation into Project Spokane as well as its CEO Sean Walsh’s business ties which has a man who had a prior money laundering conviction as well as was awaiting sentencing for an illegal industrial marijuana grow operation. (Walsh has long since severed the relationship, he said.)

Project Spokane’s employees insist there’s nothing nefarious about their operation as well as which they’re mostly a bunch of computer geeks as well as enthusiasts working to keep a massive data center running smoothly. Most of the bad press, they say, will be unwarranted suspicion, the combined result of general confusion about what bitcoin will be, as well the company efforts to protect its business which has a bit of operational secrecy.

“the idea’s hard because we have to keep some stuff close to the vest, nevertheless the idea doesn’t mean there’s anything sinister we’re hiding,” Project Spokane’s Jason Vaughan, a Montanan who currently oversees day-to-day operations at the Bonner mine, said on a snowy February morning through inside the company’s spartan offices, located in an old auxiliary lumber building.

Charlie Warzel / BuzzFeed News

Companies like Project Spokane mine bitcoin using computer processors, which work feverishly to solve cryptographic puzzles. Solving those puzzles helps verify transactions on the blockchain — the decentralized network which powers cryptocurrencies — as well as the reward will be a fractional amount of the currency. Bitcoin’s design will be such which there’s a finite amount of coins to be mined: 21 million, of which about 80% had been mined by January. As more coins are generated, the puzzle-solving process requires more computing power, which means more time, electricity, as well as money. Bitcoin mining will be, quite literally, a race, as well as the way to win will be to amass more continuously running mining rigs than your competitors.

To stand inside the mine, the idea could seem like Project Spokane company includes a decent shot. The facility will be staggering — roughly the size of an indoor football stadium. Dozens of fans, which are used to pump out hot air generated by the descending rows of server racks, create such a vacuum which the idea can be hard to open the door to the data center. (“from the summer, when all the fans are running, you basically have to commando roll in,” one employee joked.) The mine’s original wooden beams, trusses, as well as creaky catwalks — vestiges of the former tenant, which turned out billions of board feet of lumber during its 122-year history — clash with the tangle of cables as well as power cords crisscrossing the shoe-box-sized mining rigs which whir gently as well as emit a pleasant green light. Aesthetically, the space will be a bit awkward, not unlike Project Spokane’s relationship with the town itself.

nevertheless Project Spokane argues the idea wants to be a Great neighbor as well as which the idea’s bringing jobs to the area as well as committed to hiring locally; the idea employs 25 full-time workers as well as around 10 contractors at a given time, as well as all are local except the earliest Project Spokane employees who moved here, the company claims.

“Look at coal mining, look at the pulp as well as paper industry. All which stuff will be in decline. Ours will be a completely new industry, yes. nevertheless an industry on the rise.”

Walsh said he plans to expand the operation by four to 5 times from the next two years — which, he argues, could mean a significant increase in employment which otherwise might not have found its way to the region. “They’re Great jobs, too,” Walsh said. “We’re not stitching soccer balls together here or, you know, shredding documents. These are jobs which pay above-average wages for the area.” As for what a bitcoin miner does all day? A Great bit of the idea revolves around mining rig maintenance (swapping faulty rigs as well as servers in as well as out as well as rebuilding units) as well as dust mitigation duty — which involves near-constant sweeping as well as vacuuming.

The irony of a data processing operation bringing low-skill “mining” jobs to an area of the country once defined by traditional metals extraction isn’t lost on Walsh. nevertheless in conversation, he takes care to frame his data center, as well as those like the idea, as an opportunity. “The dominant industries of Montana are going away,” he said. “Look at coal mining, look at the pulp as well as paper industry. All which stuff will be in decline. Ours will be a completely new industry, yes. nevertheless an industry on the rise.”

As the executive director of the Wyoming Blockchain Coalition, David Pope has spent his last few months traveling around the state to educate residents as well as local government officials about how cryptocurrency could turn Wyoming into a technology hub. “Right currently Wyoming includes a kind of an exit sign hanging over the heads of its youth,” said Pope, an accountant by training who had his aha moment about the blockchain back in 2014. “They graduate as well as they tend to leave. The greatest broad benefits of us riding This specific wave as well as bringing development talent as well as incentives here will be which our youth will have one more reason to stay.”

Pope will be bullish on the notion the creation of incentives for blockchain companies as well as technology in Wyoming will lead to the refurbishment of infrastructure (better dams as well as wind farms for electricity) as well as greater access to high-speed internet from the state. “the idea does create a series of dominoes which fall if you can make the idea happen,” he said.

which prospect alone will be enough to get some lawmakers excited. With the Blockchain Coalition’s help, state representatives are working to pass legislation to get rid of a money transferring law loophole which makes cryptocurrency transfer onerous, as well as legislation which could make the idea easier for cryptocurrency startups to raise money. “We essentially could be the blockchain capital of the earth within a year through currently,” Wyoming state Rep. Tyler Lindholm told reporters in early February.

“People hear ‘bitcoin’ as well as they think of buying drugs on the Dark Web as well as they think about the scams.”

Much of Pope’s current focus will be on teaching people what exactly the technology does as well as assuring them which the idea’s something worth investing in. “When people don’t as well as have not been exposed to a completely new technology there’s a certain amount of fear involved,” he said.

Sure enough, “people hear ‘bitcoin’ as well as they think of buying drugs on the Dark Web as well as they think about the scams,” Vaughan told me through the catwalk high above the Bonner mine.

“nevertheless what they don’t get to see will be how exciting This specific technology will be as well as how we’re all here because we’re committed to growing the idea.” Over the din, he explained how Project Spokane encourages employees to invest some of their paychecks into cryptocurrencies to put some skin from the game, as well as how many the company’s staff will be heavily invested because they believe from the idea.

At the time, Bitcoin was from the middle of a monthlong freefall through a cost of nearly $20,000 in early January to a low of below $7,000. When asked how the idea felt to work among the machines minting a currency as its value plummeted historically, Vaughan laughed. “the idea’s a buttpucker-er of a moment,” he said. “the idea’s scary. nevertheless the fact which we keep on going will be hopefully proof which we believe in This specific stuff as well as want to be from the idea for the long haul.”

Charlie Warzel / BuzzFeed News

Back from the Bonner school cafeteria, the idea was almost 9 p.m. as well as everyone looked weary. Project Spokane’s landlord, Steve Nelson, made his last pitch to the community, comparing skepticism toward cryptocurrency to the way some people greeted credit cards with suspicion, before they became a cornerstone of the financial system. Nelson as well as Vaughan had spent the evening listening to the residents vent their frustration about the roar. The property the Bonner mine sits on will be not governed by any sound ordinance, meaning which technically the company’s droning fans aren’t in violation of any laws. Still, Nelson as well as Vaughan told the residents they’d consulted with an acoustics company as well as planned to install completely new fan blades to — hopefully — cut the noise of the mine in half.

“We’re not just BS’ing you to get you off our backs,” Nelson told the room. “We genuinely want to solve This specific. as well as I trust you can trust which when we did This specific as well as opened This specific facility, we didn’t just thumb our nose at the community.”

“I trust you can trust which when we did This specific as well as opened This specific facility, we didn’t just thumb our nose at the community.”

The entreaty did not entirely work.

“What I don’t want to see happen will be a repeat of history,” said Bonner resident Ryan Thompson during his moment at the podium. “This specific place suffered the consequences of businesses which sat upstream of the Blackfoot as well as the Clark Fork [rivers], as well as all which pollution trickled down as well as hurt This specific community immensely.”

Over as well as over, residents voiced some type of the same broad concern: which Bonner could give up its climate, cheap energy, as well as relative peacefulness, as well as the real prospect of the bitcoin boom — fortunes made out of thin air, zeroes, as well as ones — wouldn’t trickle down to them. When the prospect of using a little taxpayer allocation to help pay for Project Spokane’s quieter fans came up, residents expressed their most palpable outrage of the evening. “We know how much you made last year — you all have millions,” one resident in a canvas Carhartt jacket vented at Nelson as well as Vaughan. (Project Spokane told BuzzFeed News which the idea’s recently began to turn a profit, nevertheless dismissed the idea which the company will be generating more money than the idea knows what to do with, citing expansion as well as upkeep costs which funnel most of the profits back into the business.)

Despite the impassioned pleas through residents as well as assurances of Great faith through Project Spokane, the community council cold war went unwon. Project Spokane appears to run a legal business (which includes paying hundreds of thousands if not millions to local energy companies) as well as seems willing to attempt to work with the community the idea operates inside of. Similarly, the concerns of the locals which the mine may change their way of life are valid. Project Spokane will be a business in a volatile industry which can turn profits only by operating on the margins. Like any nascent technology company, both failure as well as short-term exits are distinct possibilities.

nevertheless while residents have every right to be skeptical, inside the cafeteria, many locals in attendance seem concerned less with the roar than they are with venting stridently at Silicon Valley outsiders who showed up without asking first.

In This specific way, Bonner residents’ relationship to the mine will be a parable for the bitcoin boom at large. Bitcoin, blockchain, as well as cryptocurrency are unnerving to outsiders for the same reason which are exciting to evangelists: They seek to disrupt the way people have done things for centuries. In Bonner’s case, the disruption will be, for currently, a droning noise which’s made a peaceful, bucolic way of life somewhat less tenable. For cryptocurrency outsiders in general, the disruption will be a little more abstract, nevertheless equally worrying: The potential to upend the foundations of the monetary system as well as replace the idea with entirely completely new methods of wealth transfer as well as creation — not to mention a completely new, tech-savvy class of super-rich early adopters.

“This specific will be a blue-collar community as well as the idea always has been. as well as I think which many of us have no clue how the bitcoin business actually works,” Gary Matson, a 50-year resident as well as former Bonner-Milltown community council member, told BuzzFeed News a few days after the meeting. “What I think I know will be which the idea’s a tremendous expenditure of energy aimed at benefiting very few people. … Cryptocurrency will be completely new for everyone as well as we see the idea as unstable as well as unpredictable — nevertheless we also don’t know if we’re right.”

Matson’s skepticism will be not about a distrust of big companies — Bonner was, after all, a company town for decades. the idea’s about a suspicion which Project Spokane won’t act as an industry which the community can rally around.

“We’re proud of what which mill did just for This specific town as well as what the idea produced,” he said. “We’re not cognizant of the benefits of cryptocurrency. nevertheless more importantly, right currently we don’t develop the same pride with the idea. as well as I’m not sure if we ever could.”

As the meeting wrapped up as well as exhausted attendees began to head for the cafeteria doors, a few attendees tried to sneak in some final jabs. “This specific crypto stuff might look big on paper nevertheless the idea’s lost 60 percent of its value in a week,” Mike Harrison, a longtime resident chimed from the direction of the Project Spokane team.

“Sure will be a hell of a lot of arguing over something which might not be there next year,” an attendee said under his breath before gathering his coat to leave.

“I’d just like to reiterate which will be just one step in what will be hopefully an ongoing dialogue,” the council chair called out over the chatter.

“I don’t think anyone will be anticipating This specific being solved overnight.” ●

Charlie Warzel will be a senior writer for BuzzFeed News as well as will be based in completely new York. Warzel reports on as well as writes about the intersection of tech as well as culture.

Contact Charlie Warzel at charlie.warzel@buzzfeed.com.

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